Judge Tosses Antitrust Suit Over Home Products

(CN) – A federal judge in Chicago dismissed a class action accusing Sara Lee, Colgate-Palmolive and others of conspiring to fix the price of products such as toothpaste and shower gel in the United States.

U.S. District Judge Virginia Kendall said the court lacks subject-matter jurisdiction over antitrust claims brought by Commercial Street Express and three individuals. The plaintiffs said the price-fixing scheme forced consumers to pay higher prices for oral, personal and home-care products. Defendants included Henkel Chemie Verwaltungsgesellschaft MBH, Henkel Corp., Unilever N.V., Unilever PLC, and Unilever United States. The plaintiffs based their antitrust count on a February 2006 German price-fixing suit against the companies. The German Federal Cartel Office (FCO) fined the defendants for illegally passing on information on price talks with retailers to influence the market behavior of competitors and remove the uncertainty of competitive conditions in Germany. According to the FCO, in early 2006 the defendants agreed to hike up the price of Pril and Palmolive dish detergents, Fa, Duschdas and Palmolive shower gels, and Signal, Dentagard and Colgate toothpaste brands. Their behavior came to light after Colgate “spilled the beans” to German antitrust authorities. That same year, Henkel reported an astounding rise in profits, claiming 4.1 billion euros in home-care profits and 449 million euros in operating profits. “Market growth was more price-driven than in previous years because … it became possible to pass on raw material cost increases by raising products prices,” Henkel claimed, saying the same factors affected U.S. profits. Unilever, Sara Lee and Colgate also reported billions of dollars in U.S. profits in 2006 and 2007. The plaintiffs argued that the global companies’ German price-fixing conspiracy drastically increased their overall profitability, including in the U.S. market. However, Judge Kendall ruled that such an argument lacks subject matter jurisdiction and is insufficient under the antitrust Sherman Act laws, which are trumped internationally by the Foreign Trade Antitrust Improvements Act. “The Sherman Act does not prevent (companies) from entering into a business arrangement, however anticompetitive, as long as those arrangements adversely affect only foreign markets,” Kendall wrote. The judge also tossed the plaintiffs’ state-law claims, citing a lack of original jurisdiction.